Have the UK banking law regulation reforms introduced after the 1st of April 2013 led to increased and sufficient protection to promote financial stability?

Abstract beveling law ruler has advanced importantly since the global fiscal crisis was first instigated in 2008. Most notably, on the initiatory April 2013 the pecuniary function Authority (FSA) was abolished and its functions transferred to two refreshful regulators the Financial assume Authority (FCA) and the Prudential ordinance Authority (PRA). The curse of England (BoE) also took all over the FSAs responsibilities for monetary market infra complex body parts and the Financial Policy Committee (FPC) was established. condescension these reforms, it is questionable the pecuniary industry is organism better regulated and it seems as though further changes may still be require.1IntroductionThe Financial Services hazard (FSA) 2012 came into force on the 1st of April 2013 in swan to establish a new restrictive framework for the monetary agreement. down the stairs the new Act, the Financial Services Authority (FSA) was replaced by two new regulators the Financial C onduct Authority (FCA) and the Prudential Regulation Authority (PRA). A Financial Policy Committee of the Bank of England was also created and the Bank of England was provided with the might to regulate and provide stableness to the pecuniary placement.1 This new restrictive structure became known as the twin-peaks model and was considered to be a major milestone for the regulative Reform Programme.2 The Act made signifi tail endt amendments to The Financial Services and Markets Act (FMSA) 2000 and restructured and broadened the law relating to market manipulation and shoddy statements and impressions. The scope of the excess resolution regime under the Banking Act (BA) 2009 was also extended and a new category of regulated activity in relation to benchmarks (e.g. LIBOR) and honorable mention ratings was created. The approval, supervision and discipline of sponsors regime under the FSMA was also changed and the regulation of consumer character was transferred to the FSA. This theme leave discuss these new regulatory regimes in greater detail in order to consider their rough-and-readyness. inquiry Aims and Objectives The aim of this research is to find prohibited the extent to which the 2013 reforms assume proven effective in providing increased and qualified tribute to promote monetary stability.Research hesitationIs the banking industry being regulated effectively?Have the 2013 reforms improved the regulation of the banking industry?Are further changes needed to the banking system to ensure that financial stability is being promoted?Key Words Financial IndustryBanking formFinancial stabilityBanking LawTwin Peaks and BankingBanking RegulationMethodologyA secondary research arise will be under earnn for this study by accessing relevant text books, journal articles, governmental reports and online legal informationbases. This will alter me to acquire the trance information that is needed and will allow me to conk out existing lit in t his bea. This will be a more cost effective and time saving way to undertake the research. This is appropriate for this particular assignment as it would be extremely baffling to prevail primary research from large organisations such as the FSA. A soft research method will be used as this study requires a descriptive outcome as opposed to a predictive one.Literature ReviewThe aim of a bank is to provide financial services to individuals and organisations by enabling them to either borrow or amaze money, whilst also creating credit. However, because of the complex nature of the modern banking descent, a lack of regulation appears to exist in this ara. This is evident by the recent financial crisis which seemed to give that banks ar capable of fetching extortionate risks without any intervention. This is damaging to the scrimping as surface as consumers. However, because of how difficult it is to determine what a bankers business should consist of, problems arise when t rying to establish how the banking industry should be regulated. This literature review will provide an overview as to how effective the current regulatory system is by reviewing banking law as it currently stands. This will be compared to the approach that was undertaken prior to the financial crisis and an assessment as to whether more effective regulation now exists as a answer of the 2013 reforms will be provided.The Financial Services and Markets Act (FMSA) 2000 regulated the banking and insurance sector and provided the FSA with the king to regulate the financial system. The objectives under the Act were to provide (a) market government agency (b) public awareness (c) the protection of consumers and (d) the reduction of financial crime. However, since the global financial crisis (GFC) was instigated, it became apparent that a new regulatory structure was needed. Many argued that the system failed to adequately account for the complexity of modern financial markets and the n ature and curtilage of financial innovation.3 A more interventionist approach was said to be needed to that those providing financial services could be regulated better.4 This would help to combat financial crime, which was considered one of the main reasons for the GFC.5The FSA was largely criticised for failing to keep abreast with the advances in society and that as a result they were no longer required. Hence, it was suggested that it was just a matter of time before the FSA was abolished completely the diminished government agency for the FSA is simply a reflection of this new reality.6 Whilst there does appear to be true to a certain extent, it appears that the role of the FSA did help to regulate the financial sector more adequately over the years and that many banking failures are likely to have been avoided since the FMSA was first implemented. This was stressed by Southern when he considered the importance of regulation in the financial sector7 and by Sergeant who poin ted out that the whole basis of financial regulatory law was recast on a completely updated and integrated basis.8 Again, this highlights the importance of the FSAs powers that were conferred upon it by the FMSA.The Banking Act 2009 was, nonetheless, introduced as an emergency response to the GFC and was intended to provide greater powers to bankers to change them to regulate the financial sector more effectively. Hence, it was felt that there existed inbuilt failures within the UK banking system and that vital changes were thereby needed.9 The Act was considered a have development in preventing future financial panics from taking place.10 Conversely, it was said that the Banks powers were too limited and that as a result the banking system could not be effectively regulated. It was therefore suggested that the Bank should be privatised so that more sufficient banking regulation can be effectuated.11Since the 2012 banking law reforms began, a number of further changes have been m ade to the financial system. As swellhead as creating the FSA, the PRA and the FPC, the Bank of Englands role as the supervisor for financial market infrastructure (FMI) was also expanded by the 2012 Act by adding securities settlement systems and central counterparty regulation to its existing responsibility for recognised inter-bank compensation systems.12 Furthermore, the Financial Services (Banking Reform) Act 2013 was implemented which was intended to provide the HM Treasury and the PRA with the power to implement the recommendations of the Independent Commission on Banking (ICB) on ring-fencing requirements for the banking sector.13The FCO has been subjected to great deal of criticism since it was established with many arguing that petite benefit has been made to the financial system under the new regulatory structure.14 Accordingly, significant changes were made to the financial system as a result of the GFC, yet it seems as though further changes are expected to take pla ce since there are increasing concerns about the ways in which financial services organisations (FSOs) are extending business.15 It cannot be said that FSOs are adequately preserving the interests of its consumers and unless FSOs have effective risk management strategies in place, a lack of consumer protection will ensue.The FSA 2012 has made great attempts to remediate the difficulties caused by the previous law, yet it remains to be seen whether the new regulatory regime goes far enough. Nevertheless, the existing offence for misleading statements and practices that is contained under s. 397 of FSMA is being repealed and replaced by three separate offence misleading statements (s. 89) misleading impressions (s. 90) and misleading statements in relation to benchmarks (s. 91).16 This offence is broader than s. 397 and involves those statements that were made recklessly as well as those made intentionally. This makes it a lot harder for FSOs to mislead consumers and ensures that m ore effective regulation is in place. The changes that have been made to the BA 2009 include the extended special resolution regime to certain UK investment firms, group companies of UK banks and UK clearing houses. Under the new regime, the PRA will be responsible for promoting the stability of the financial system by regulating all deposit taking institutions.17 The FCA will be responsible for regulating retail, wholesale and financial markets, which increases protection and seeks to achieve financial stability overall.ConclusionIt is questionable whether the current regulatory regime is sufficient in regulating the banking industry,18 although significant improvements have in fact been made.19 Nevertheless, given the complexity of modern banking, it will remain difficult to regulate this area effectively for the foreseeable future. give that the changes are middling recent, it remains to be seen just how effective the FCA is in regulating this industry. Given the importance of having appropriate mechanisms in place to deal with any disruptions to the financial system, the changes that have been made so far are likely to be welcomed.20 This is because, the new twin peaks model is intended to strengthen the current approach to financial regulation, whilst also establishing a more resilient and stable financial system.21 It is likely that FSOs will be put under greater pressure to ensure that they are conducting their business in an appropriate behavior as tighter controls will be in place. Therefore, whilst it is likely that future changes are still needed, the reforms that were implemented in 2013 have led to increased and sufficient protection to promote financial stability.Data AnalysisIn analysing the data, a process will be undertaken which allows each component of the data to be inspected using logical and analytical reasoning. This will allow an assessment to be made as to whether all of the data is effective and reliable. In doing so, the data wil l be gathered from a variety of sources and then reviewed and analysed so that an appropriate conclusion can be drawn. The quality of the research will therefore be judged in relation to the resources available and the effectiveness with which those resources have been used to investigate the particular topic in question.22EthicsWhen pioneer any type of research, there are certain ethical rules of conduct which need to be followed. For example, any data that is collected must be used in a way that is honest, unbiased, sincere, free from errors or negligence, well-defined to critique and it must protect confidential communications.23 A risk-analysis approach can be adopted in order to achieve this as well as adhering to the BPS guidelines.24BibliographyA Hudson., The Law of Finance, (Sweet & Maxwell, 2009).C Bates., A shortened Overview of the Financial Services Act 2012 and the New UK Financial Regulation mannikin (2013) Clifford Chance, 12 June, 2014.C Dawson., Introduction t o Research Methods A Practical Guide for Anyone pioneer a Research Project, (How to Books Ltd, 4th Edition, 2009).C Sergeant., Risk-Based Approach Central to FSAs Regulation (2001) 151 New Law Journal 1409, restoration 7001.D Awrey., Complexity, universe and the Regulation of Modern Financial Markets (2011) Harvard Business Law, Oxford Legal Studies Research makeup No 49/2011, 08 May, 2014.D B Resnik., What is Ethics in Research and Why is it Important? (2011) 11 May, 2014.FSA., Delivering a Reduction of Financial Crime (2011) FSA yearbook Report 2011/12, fsa.gov.uk/pubs/annual/ar11-12/section5.pdf 12 May, 2014.G Nicholson and M Salib., The Regulatory Powers and Purview of the Bank of England Pre and Post Crisis (2012) Journal of International Banking and Financial Law, Volume 28, Issue 10.HM Treasury., A New Approach to Financial Regulation Judgement, Focus and Stability (2010), CM 7874, 12 May, 2014.HM Treasury., Creating Stronger and Safer Banks (2014) 12 June, 2014.J Sm ethurst., Forward the Resolution (2014) Corporate economy and Insolvency, Volume 7, Issue 1, 18.J Smethurst., Twin Peaks Bridging the Gap. Co-Ordination Under the new Regulatory Framework (2012) 1 Journal of International Banking and Financial Law 33, Issue 1.KMPG., Evolving Banking Regulation 2014 (2014) 12 May, 2014.KPMG., Twin-Peaks Regulation Key Changes and Challenges (2012) Financial Services, 11 May, 2014.L Taker., Who Regulates the FSA? (2010), 12 May, 2014.M Denscombe., maroon Rules for Social Research Guidelines for Good Practice. (2nd edn. McGraw-Hill International, 2009).M Littlewood and S Frith., The Bank of England should be privatised (2010) Institute of Economic Affairs, 11 May, 2014.N Clark., King calls for radical banking reform in UK (2010) The Independent, 12 May, 2014.R Tomasic., Financial System Reform or Business as Usual? International Banking and Financial Law, Volume 29, Issue 5, 321.S Schich., A Framework for Discussing Bank Regulatory Reform (2013) Journal of Financial Regulation and Compliance, Volume 21, Issue 4, 308-318.